A supply chain generally refers to a system of organizations, people, technology, activities, information and resources involved in moving products (e.g., raw materials) from one point (such as a manufacturer's facility) to another (such as a customer's distribution or manufacturing center). For example, a supply chain may be used to describe the production and delivery of gaseous (or liquid) substances stored in pressurized tanks (often referred to as cylinders) to customers. In such a supply chain, a producer may generate product using an air separation unit (ASU) to separate atmospheric air into gaseous components (e.g., oxygen gas (O2), nitrogen gas (N2), hydrogen gas (H2), Argon gas (Ar), etc.). The purified gases (or mixtures thereof) may be stored at high pressure in a cylinder and distributed to customers. At a filing station, cylinders are filled for delivery to customers and returned (for refilling). Elements of this supply chain (i.e., the filling, delivering, retrieving and refilling cylinders) itself may be a component of other supply chains for the customers where the product is delivered. Such a supply chain uses the materials in the cylinders in manufacturing or other production activities, resulting in the creation and distribution of products to other customers.
A typical cylinder supply chain network consists of the filling/production centers, hubs/distribution centers, and customers. Filling centers supply cylinders to hubs, from which filled cylinders are distributed to customers. Stocks of cylinders at the hubs enable the operator of a cylinder supply chain distribution network to maintain a certain service level and react to uncertainty in the supply chain (e.g., fluctuations in demand from the customers). The agility of the supply chain and the operational efficiency are constrained by the structure of the network determining the flow of material. Determining the locations of the filling stations and hubs is typically considered a strategic decision, made apart from the operational level decisions such as the inventory management and shipping or transportation costs included by a supply chain distribution network.